H1 fund raising via commercial paper dips 15% to Rs 1.7 lakh cr
31 Oct 2013 10:56 PM GMT
Fund raising by Indian corporates through issuance of commercial paper declined by 15 per cent to Rs 1.70 lakh crore in the first half of the 2013-14 fiscal.
Commercial Papers (CPs) are unsecured money market instruments issued to raise short-term funds with maturity period of less than one year.
According to a report by Prime Database, companies mopped -up Rs 1,70,089 crore through issuance of CPs in the six months ended 30 September, down from Rs 2,01,395 crore in the first half of the preceding fiscal, 2012-13.
There were 169 issues in the April-September period, compared to 184 issues in the year-ago period.
‘Fund raising through CPs, which had witnessed a lot of buoyancy in last two years, nearly dried up after Reserve Bank in mid-July raised the lending rates by 200 basis points under the marginal standing facility, which is a penal lending rate.
‘This had pushed up the short-term rates by more than 300 basis points, making it unviable for companies to borrow from the markets,’ Prime Database Managing Director Pranav Haldea said.
The subsequent easing of short-term rates has led to the companies going to the CP market, instead of high-cost borrowings from banks.
‘Fund raised through CPs, which were at Rs 36,702 crore in June and which fell to Rs 29,520 crore in July and further to just Rs 7,652 crore in August, saw a reversal of trend in September with Rs 18,684 crore being raised,’ the report said.
In the first half this year, 60 per cent of the funds raised were with a yield-to-maturity of between 8 per cent and 9 per cent.
The highest mobilisation was from the financial services space at 61 per cent, followed by oil segment at 15 per cent and pharmaceuticals at 7 per cent.
Commercial Papers (CPs) are unsecured money market instruments issued to raise short-term funds with maturity period of less than one year.
According to a report by Prime Database, companies mopped -up Rs 1,70,089 crore through issuance of CPs in the six months ended 30 September, down from Rs 2,01,395 crore in the first half of the preceding fiscal, 2012-13.
There were 169 issues in the April-September period, compared to 184 issues in the year-ago period.
‘Fund raising through CPs, which had witnessed a lot of buoyancy in last two years, nearly dried up after Reserve Bank in mid-July raised the lending rates by 200 basis points under the marginal standing facility, which is a penal lending rate.
‘This had pushed up the short-term rates by more than 300 basis points, making it unviable for companies to borrow from the markets,’ Prime Database Managing Director Pranav Haldea said.
The subsequent easing of short-term rates has led to the companies going to the CP market, instead of high-cost borrowings from banks.
‘Fund raised through CPs, which were at Rs 36,702 crore in June and which fell to Rs 29,520 crore in July and further to just Rs 7,652 crore in August, saw a reversal of trend in September with Rs 18,684 crore being raised,’ the report said.
In the first half this year, 60 per cent of the funds raised were with a yield-to-maturity of between 8 per cent and 9 per cent.
The highest mobilisation was from the financial services space at 61 per cent, followed by oil segment at 15 per cent and pharmaceuticals at 7 per cent.
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